Disruption's call for action | Shahar Larry | TEDxINSEAD
Jaha Lari argues that corporate innovation is inherently limited to incremental improvements, necessitating a new framework called "elastic innovation." He proposes that organizations must manage disruption by externalizing the process through a diverse network of external "disruptors" to bypass internal biases. This system requires establishing an "intelligence unit," selectively "betting" on potential disruptors, and then nurturing them to achieve independence.
## Speakers & Context
- **Jaha Lari** — Innovation consultant since 2005.
- **Context:** Presentation on innovation disruption, addressing the common corporate inability to foresee or handle radical change.
- **Pre-talk interactions:** Interviewed business leaders who consistently stated that disruption is a serious worry, but Lari noted that these leaders often concluded his industry was not their problem "not yet."
## Theses & Positions
- Corporate innovation is practically unable to focus on anything but improvements to existing offerings.
- Disruptive innovation differs fundamentally from continuous improvement, originating from the large space of what is "unknown that we don't know."
- Corporations cannot prepare for disruption because they are trapped by their existing worldview and biases.
- The solution is to externalize the management of disruption by creating a diverse, autonomous network of external disruptors.
- The overall message is a call to acknowledge corporate limitations and actively engage with the unknown.
## Concepts & Definitions
- **Disruption:** Defined as "a surprise change of the rules that make existing value creation strategies ineffective."
- **Corporate Innovation:** Characterized as the tendency to focus only on incremental improvements to existing offerings.
- **Elastic Innovation:** A four-step framework developed by Lari to proactively manage and harness disruption.
- **Mothership:** Metaphor for the existing, established corporation undergoing change.
## Mechanisms & Processes
- **Elastic Innovation Framework (4 Steps):**
1. **To Know:** Creating a small, benevolent NSA (intelligence unit) focused on exploring and mapping potential sources of disruption (can be companies, researchers, or communities).
2. **To Bet:** Clearing the map to select and connect only the promising potential disruptors, acting like buying life insurance for the business.
3. **To Grow:** Investing small resources in the selected disruptors, connecting them, and controlling the information flow to keep them "hungry and driven." This stage includes incubators, accelerators, and PoC packages.
4. **To Realize:** Allowing the disruptors to operate autonomously—some integrated, some allowed to accelerate independently.
- **Process Requirement:** For the entire process to work, the Intelligence Unit, the betting process, the work with disruptors, and the disruptors themselves *must* all be autonomous and insulated from the mothership.
## Named Entities
- **Tel Aviv University** — Lari's educational background.
- **Fortune 500 companies** — Corporations Lari has worked with, noting their tendency toward incrementalism.
- **Cisco** — Company mentioned in relation to John Chambers's prediction.
- **Ed** — A client of Lari's who had radical ideas buried by the company.
- **Harvard professor Clayton Christensen** — Author associated with *The Innovator's Dilemma* (1995) and *The Innovator's Solution* (2000).
- **Samsung** — Cited as an example of a company always seeking ways to improve existing smartphone batteries.
- **McKinsey** — Firm that advised AT&T regarding the mobile market.
- **AT&T** — Company whose blunder was projected into the mobile market by McKinsey.
- **Symbian** — Operating system that Gardner predicted would lead the mobile market by 2012.
- **Cheyenne's Eve** — Name given to the intelligence officers within the intelligence unit.
- **Ludwig Wittgenstein** — Philosopher quoted by Lari.
## Numbers & Data
- **2005:** Year Lari became an innovation consultant.
- **2010:** Year Lari helped at the BP catastrophe in the Gulf of Mexico.
- **Jun 8, 2015:** Date of John Chambers's prediction.
- **10 years:** Time frame over which John Chambers predicted over 40% of Fortune 500 companies would vanish.
- **40%:** Percentage of Fortune 500 companies predicted to vanish over 10 years.
- **1973:** Year the first modern cherry tomato was invented.
- **17:** Number of other groundbreaking, totally radical disruptive looks similar to the cherry tomato since 1973.
## Examples & Cases
- **Bitcoin/Cryptocurrency:** Cited as an example of an emergent, non-intrinsic value technology that people began buying/selling, akin to disruption.
- **Uber/Lyft:** Mentioned as industry sectors (like the hotel industry) that were overlooked by established models.
- **The Cherry Tomato:** Used as an analogy; its invention in 1973 was one of many radical disruptions, unlike a mere add-on feature (like a private gramophone on the Titanic).
- **Samsung Battery Example:** Illustrates incremental improvement—always trying to make the existing smartphone battery smaller, better, or thinner.
- **AT&T/McKinsey Prediction:** Example of flawed forecasting, predicting only one million mobile users by the year 2000, despite actual numbers being over a hundred million.
## Tools, Tech & Products
- **Elastic Innovation Framework:** The proposed model for managing disruption.
- **Intelligence Unit:** The first step/concept to map potential disruption sources.
- **Open Source Database:** Proposed community resource for practical tools and frameworks.
## References Cited
- *The Innovator's Dilemma* (1995) by Clayton Christensen.
- *The Innovator's Solution* (2000) by Clayton Christensen.
## Trade-offs & Alternatives
- **Incremental Improvement vs. Disruptive Innovation:** Improvement (like a slightly better battery) builds on what is known; disruption comes from the unknown unknowns.
- **Corporate Comfort vs. Necessary Risk:** Corporations prefer the known, measurable improvements to avoid the uncertainty inherent in true disruption.
- **Natural Growth vs. External Management:** The natural cycle of disruption is insufficient; proactive external management is required.
## Methodology
- Lari's approach is consultative: Diagnosis (identifying corporate blindness) followed by prescription (implementing the Elastic Innovation framework).
- The framework relies on qualitative intelligence gathering ("To Know") combined with calculated, strategic investment ("To Bet" and "To Grow").
## Conclusions & Recommendations
- Organizations must transition from a mindset of knowing to embracing what they *don't* know.
- The ultimate actionable step is to build an external network of disruptors, insulate this network, and let it operate autonomously.
- Call to action: Joining the community to build out the open-source database for practical tools to "ride the dragon that is disruption."
## Implications & Consequences
- The failure to adopt these externalized disruption models means the mothership will eventually become irrelevant, either being overtaken or simply becoming obsolete.
- The concept suggests that external perspectives (the "disruptors") are inherently more valuable than internal institutional knowledge when facing radical change.
## Verbatim Moments
- *"In April two thousand and eight former nokia CEO called the iphone a niche product."*
- *"These are real products corporate innovation is similar to inventing a new type of room with a private gramophone on board the Titanic certainly adds to the experience but it does very little for avoiding icebergs at night."*
- *"I look for companies I think we'll add the most value to our current business."* (Said by the senior innovation manager)
- *"I suggest that if disruption is always surprising perhaps what you should be looking for are actually companies she least expects will add value to her business."*
- *"disruption means a surprise change of the rules that make existing value creation strategies ineffective."*
- *"What we know, we know... into what we know that we don't know."*
- *"if no one ever did silly things nothing intelligent would ever get done"* (Ludwig Wittgenstein)
- *"The mothership is free to continue on its current trajectory innovating and milking its existing market the disrupters will try some will succeed when they do they will either buy time for the mothership to circle back or they will grow so fast the mothership won't matter anymore"*